LOANS | 6 Months Ended |
Jun. 30, 2014 |
Receivables [Abstract] | ' |
LOANS | ' |
3. LOANS |
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Loans outstanding, by general ledger classification, as of June 30, 2014 and December 31, 2013, consisted of the following: |
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| | | | | % of | | | | | | % of | | | | | | | | | |
| | June 30, | | | Totals | | | December 31, | | | Total | | | | | | | | | |
(In thousands) | | 2014 | | | Loans | | | 2013 | | | Loans | | | | | | | | | |
Residential mortgage | | $ | 469,648 | | | | 25.05 | % | | $ | 532,911 | | | | 33.85 | % | | | | | | | | |
Commercial mortgage | | | 1,166,747 | | | | 62.23 | | | | 831,997 | | | | 52.85 | | | | | | | | | |
Commercial loans | | | 158,103 | | | | 8.43 | | | | 131,795 | | | | 8.37 | | | | | | | | | |
Construction loans | | | 6,033 | | | | 0.32 | | | | 5,893 | | | | 0.38 | | | | | | | | | |
Home equity lines of credit | | | 48,740 | | | | 2.6 | | | | 47,905 | | | | 3.04 | | | | | | | | | |
Consumer loans, including fixed | | | | | | | | | | | | | | | | | | | | | | | | |
rate home equity loans | | | 23,414 | | | | 1.25 | | | | 21,852 | | | | 1.39 | | | | | | | | | |
Other loans | | | 2,255 | | | | 0.12 | | | | 1,848 | | | | 0.12 | | | | | | | | | |
Total loans | | $ | 1,874,940 | | | | 100 | % | | $ | 1,574,201 | | | | 100 | % | | | | | | | | |
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In determining an appropriate amount for the allowance, the Bank segments and evaluates the loan portfolio based on federal call report codes. The following portfolio classes have been identified as of June 30, 2014 and December 31, 2013: |
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| | | | | % of | | | | | | % of | | | | | | | | | |
| | June 30, | | | Totals | | | December 31, | | | Total | | | | | | | | | |
(In thousands) | | 2014 | | | Loans | | | 2013 | | | Loans | | | | | | | | | |
Primary residential mortgage | | $ | 483,117 | | | | 25.81 | % | | $ | 546,827 | | | | 34.82 | % | | | | | | | | |
Home equity lines of credit | | | 48,666 | | | | 2.6 | | | | 47,905 | | | | 3.05 | | | | | | | | | |
Junior lien loan on residence | | | 13,579 | | | | 0.73 | | | | 13,114 | | | | 0.84 | | | | | | | | | |
Multifamily property | | | 845,310 | | | | 45.17 | | | | 541,503 | | | | 34.48 | | | | | | | | | |
Owned-occupied commercial real estate | | | 81,390 | | | | 4.35 | | | | 79,735 | | | | 5.08 | | | | | | | | | |
Investment commercial real estate | | | 297,190 | | | | 15.88 | | | | 267,406 | | | | 17.03 | | | | | | | | | |
Commercial and industrial | | | 77,459 | | | | 4.14 | | | | 51,638 | | | | 3.29 | | | | | | | | | |
Secured by farmland | | | 193 | | | | 0.01 | | | | 197 | | | | 0.01 | | | | | | | | | |
Agricultural production loans | | | 175 | | | | 0.01 | | | | — | | | | N/A | | | | | | | | | |
Commercial construction loans | | | 4,734 | | | | 0.25 | | | | 5,893 | | | | 0.37 | | | | | | | | | |
Consumer and other loans | | | 19,615 | | | | 1.05 | | | | 16,212 | | | | 1.03 | | | | | | | | | |
Total loans | | $ | 1,871,428 | | | | 100 | % | | $ | 1,570,430 | | | | 100 | % | | | | | | | | |
Net deferred fees | | | 3,512 | | | | | | | | 3,771 | | | | | | | | | | | | | |
Total loans including net deferred costs | | $ | 1,874,940 | | | | | | | $ | 1,574,201 | | | | | | | | | | | | | |
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Included in the totals above for June 30, 2014 are $113 thousand of unamortized discount as compared to $396 thousand of unamortized discount for December 31, 2013. |
The following tables present the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance for loan losses as of June 30, 2014 and December 31, 2013: |
| | 30-Jun-14 | |
| | Total | | | Ending ALLL | | | Total | | | Ending ALLL | | | | | | | |
| | Loans | | | Attributable | | | Loans | | | Attributable | | | | | | | |
| | Individually | | | To Loans | | | Collectively | | | To Loans | | | | | | | |
| | Evaluated | | | Individually | | | Evaluated | | | Collectively | | | | | | Total | |
| | For | | | Evaluated for | | | For | | | Evaluated for | | | Total | | | Ending | |
(In thousands) | | Impairment | | | Impairment | | | Impairment | | | Impairment | | | Loans | | | ALL | |
Primary residential | | | | | | | | | | | | | | | | | | | | | | | | |
mortgage | | $ | 4,980 | | | $ | 263 | | | $ | 478,137 | | | $ | 2,739 | | | $ | 483,117 | | | $ | 3,002 | |
Home equity lines | | | | | | | | | | | | | | | | | | | | | | | | |
of credit | | | 110 | | | | — | | | | 48,556 | | | | 176 | | | | 48,666 | | | | 176 | |
Junior lien loan | | | | | | | | | | | | | | | | | | | | | | | | |
on residence | | | 212 | | | | — | | | | 13,367 | | | | 148 | | | | 13,579 | | | | 148 | |
Multifamily | | | | | | | | | | | | | | | | | | | | | | | | |
property | | | — | | | | — | | | | 845,310 | | | | 6,288 | | | | 845,310 | | | | 6,288 | |
Owner-occupied | | | | | | | | | | | | | | | | | | | | | | | | |
commercial | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 1,286 | | | | — | | | | 80,104 | | | | 1,839 | | | | 81,390 | | | | 1,839 | |
Investment | | | | | | | | | | | | | | | | | | | | | | | | |
commercial | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 12,823 | | | | 474 | | | | 284,367 | | | | 4,123 | | | | 297,190 | | | | 4,597 | |
Commercial and | | | | | | | | | | | | | | | | | | | | | | | | |
industrial | | | 387 | | | | 287 | | | | 77,072 | | | | 754 | | | | 77,459 | | | | 1,041 | |
Secured by | | | | | | | | | | | | | | | | | | | | | | | | |
farmland | | | — | | | | — | | | | 193 | | | | 2 | | | | 193 | | | | 2 | |
Agricultural | | | | | | | | | | | | | | | | | | | | | | | | |
production | | | — | | | | — | | | | 175 | | | | 2 | | | | 175 | | | | 2 | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | | |
construction | | | — | | | | — | | | | 4,734 | | | | 33 | | | | 4,734 | | | | 33 | |
Consumer and | | | | | | | | | | | | | | | | | | | | | | | | |
other | | | 15 | | | | 15 | | | | 19,600 | | | | 61 | | | | 19,615 | | | | 76 | |
Total ALLL | | $ | 19,813 | | | $ | 1,039 | | | $ | 1,851,615 | | | $ | 16,165 | | | $ | 1,871,428 | | | $ | 17,204 | |
| | 31-Dec-13 | |
| | Total | | | Ending ALLL | | | Total | | | Ending ALLL | | | | | | | |
| | Loans | | | Attributable | | | Loans | | | Attributable | | | | | | | |
| | Individually | | | To Loans | | | Collectively | | | To Loans | | | | | | | |
| | Evaluated | | | Individually | | | Evaluated | | | Collectively | | | | | | Total | |
| | For | | | Evaluated for | | | For | | | Evaluated for | | | Total | | | Ending | |
(In thousands) | | Impairment | | | Impairment | | | Impairment | | | Impairment | | | Loans | | | ALLL | |
Primary residential | | | | | | | | | | | | | | | | | | | | | | | | |
mortgage | | $ | 3,691 | | | $ | 126 | | | $ | 543,136 | | | $ | 2,235 | | | $ | 546,827 | | | $ | 2,361 | |
Home equity lines | | | | | | | | | | | | | | | | | | | | | | | | |
of credit | | | 111 | | | | — | | | | 47,794 | | | | 181 | | | | 47,905 | | | | 181 | |
Junior lien loan | | | | | | | | | | | | | | | | | | | | | | | | |
on residence | | | 260 | | | | — | | | | 12,854 | | | | 156 | | | | 13,114 | | | | 156 | |
Multifamily | | | | | | | | | | | | | | | | | | | | | | | | |
property | | | — | | | | — | | | | 541,503 | | | | 4,003 | | | | 541,503 | | | | 4,003 | |
Owner-occupied | | | | | | | | | | | | | | | | | | | | | | | | |
commercial | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 3,250 | | | | 464 | | | | 76,485 | | | | 2,099 | | | | 79,735 | | | | 2,563 | |
Investment | | | | | | | | | | | | | | | | | | | | | | | | |
commercial | | | | | | | | | | | | | | | | | | | | | | | | |
real estate | | | 9,949 | | | | 741 | | | | 257,457 | | | | 4,342 | | | | 267,406 | | | | 5,083 | |
Commercial and | | | | | | | | | | | | | | | | | | | | | | | | |
industrial | | | 470 | | | | 309 | | | | 51,168 | | | | 516 | | | | 51,638 | | | | 825 | |
Secured by | | | | | | | | | | | | | | | | | | | | | | | | |
farmland | | | — | | | | — | | | | 197 | | | | 3 | | | | 197 | | | | 3 | |
Agricultural | | | | | | | | | | | | | | | | | | | | | | | | |
production | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Commercial | | | | | | | | | | | | | | | | | | | | | | | | |
construction | | | — | | | | — | | | | 5,893 | | | | 120 | | | | 5,893 | | | | 120 | |
Consumer and | | | | | | | | | | | | | | | | | | | | | | | | |
other | | | 13 | | | | 13 | | | | 16,199 | | | | 65 | | | | 16,212 | | | | 78 | |
Total ALLL | | $ | 17,744 | | | $ | 1,653 | | | $ | 1,552,686 | | | $ | 13,720 | | | $ | 1,570,430 | | | $ | 15,373 | |
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Impaired loans include nonaccrual loans of $6.5 million at June 30, 2014 and $6.6 million at December 31, 2013. Impaired loans also include performing troubled debt restructured loans of $12.7 million at June 30, 2014 and $11.1 million at December 31, 2013. At June 30, 2014, the allowance allocated to troubled debt restructured loans totaled $889 thousand of which $259 thousand was allocated to nonaccrual loans. At December 31, 2013, the allowance allocated to troubled debt restructured loans totaled $1.6 million of which $720 thousand was allocated to nonaccrual loans. All accruing troubled debt restructured loans were paying in accordance with restructured terms as of June 30, 2014. The Corporation has not committed to lend additional amounts as of June 30, 2014 to customers with outstanding loans that are classified as loan restructurings. |
The following tables present loans individually evaluated for impairment by class of loans as of June 30, 2014 and December 31, 2013: |
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| | 30-Jun-14 | | | | | |
| | Unpaid | | | | | | | | | Average | | | Interest | | | | | |
| | Principal | | | Recorded | | | Specific | | | Impaired | | | Income | | | | | |
(In thousands) | | Balance | | | Investment | | | Reserves | | | Loans | | | Recognized | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 4,076 | | | $ | 3,340 | | | $ | — | | | $ | 3,141 | | | $ | 47 | | | | | |
Owned-occupied commercial real estate | | | 1,389 | | | | 1,286 | | | | — | | | | 3,455 | | | | 63 | | | | | |
Investment commercial real estate | | | 6,578 | | | | 6,578 | | | | — | | | | 5,008 | | | | 63 | | | | | |
Commercial and industrial | | | 99 | | | | 99 | | | | — | | | | 129 | | | | 7 | | | | | |
Home equity lines of credit | | | 111 | | | | 110 | | | | — | | | | 111 | | | | 3 | | | | | |
Junior lien loan on residence | | | 331 | | | | 212 | | | | — | | | | 246 | | | | 5 | | | | | |
Total loans with no related allowance | | $ | 12,584 | | | $ | 11,625 | | | $ | — | | | $ | 12,090 | | | $ | 188 | | | | | |
With related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 1,728 | | | $ | 1,640 | | | $ | 263 | | | $ | 1,016 | | | $ | 14 | | | | | |
Owned-occupied commercial real estate | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Investment commercial real estate | | | 6,245 | | | | 6,245 | | | | 474 | | | | 5,612 | | | | 68 | | | | | |
Commercial and industrial | | | 310 | | | | 288 | | | | 287 | | | | 303 | | | | 5 | | | | | |
Consumer and other | | | 16 | | | | 15 | | | | 15 | | | | 15 | | | | 2 | | | | | |
Total loans with related allowance | | $ | 8,299 | | | $ | 8,188 | | | $ | 1,039 | | | $ | 6,946 | | | $ | 89 | | | | | |
Total loans individually evaluated for | | | | | | | | | | | | | | | | | | | | | | | | |
impairment | | $ | 20,883 | | | $ | 19,813 | | | $ | 1,039 | | | $ | 19,036 | | | $ | 277 | | | | | |
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| | 31-Dec-13 | | | | | |
| | Unpaid | | | | | | | | | Average | | | Interest | | | | | |
| | Principal | | | Recorded | | | Specific | | | Impaired | | | Income | | | | | |
(In thousands) | | Balance | | | Investment | | | Reserves | | | Loans | | | Recognized | | | | | |
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 3,777 | | | $ | 2,984 | | | $ | — | | | $ | 4,813 | | | $ | 55 | | | | | |
Owned-occupied commercial real estate | | | 1,346 | | | | 1,193 | | | | — | | | | 1,893 | | | | 36 | | | | | |
Investment commercial real estate | | | 5,000 | | | | 5,000 | | | | — | | | | 314 | | | | 4 | | | | | |
Commercial and industrial | | | 176 | | | | 161 | | | | — | | | | 121 | | | | 4 | | | | | |
Home equity lines of credit | | | 111 | | | | 111 | | | | — | | | | 119 | | | | 5 | | | | | |
Junior lien loan on residence | | | 370 | | | | 260 | | | | — | | | | 312 | | | | 5 | | | | | |
Total loans with no related allowance | | $ | 10,780 | | | $ | 9,709 | | | $ | — | | | $ | 7,572 | | | $ | 109 | | | | | |
With related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 707 | | | $ | 707 | | | $ | 126 | | | $ | 636 | | | $ | 29 | | | | | |
Owned-occupied commercial real estate | | | 2,190 | | | | 2,057 | | | | 464 | | | | 2,100 | | | | 16 | | | | | |
Investment commercial real estate | | | 4,949 | | | | 4,949 | | | | 741 | | | | 4,949 | | | | 618 | | | | | |
Commercial and industrial | | | 323 | | | | 309 | | | | 309 | | | | 269 | | | | 4 | | | | | |
Junior lien loan on residence | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Consumer and other | | | 13 | | | | 13 | | | | 13 | | | | — | | | | — | | | | | |
Total loans with related allowance | | $ | 8,182 | | | $ | 8,035 | | | $ | 1,653 | | | $ | 7,954 | | | $ | 667 | | | | | |
Total loans individually evaluated for | | | | | | | | | | | | | | | | | | | | | | | | |
impairment | | $ | 18,962 | | | $ | 17,744 | | | $ | 1,653 | | | $ | 15,526 | | | $ | 776 | | | | | |
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The Corporation did not recognize any income on nonaccruing impaired loans for the three and six months ended June 30, 2014 and 2013. |
The following tables present the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2014 and December 31, 2013: |
| | 30-Jun-14 | | | | | | | | | | | | | | | | | |
| | | | | Loans Past Due | | | | | | | | | | | | | | | | | |
| | | | | Over 90 Days | | | | | | | | | | | | | | | | | |
| | | | | And Still | | | | | | | | | | | | | | | | | |
| | | | | Accruing | | | | | | | | | | | | | | | | | |
(In thousands) | | Nonaccrual | | | Interest | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 2,987 | | | $ | — | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 110 | | | | — | | | | | | | | | | | | | | | | | |
Junior lien loan on residence | | | 211 | | | | — | | | | | | | | | | | | | | | | | |
Owned-occupied commercial real estate | | | 1,286 | | | | — | | | | | | | | | | | | | | | | | |
Investment commercial real estate | | | 1,580 | | | | — | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 347 | | | | — | | | | | | | | | | | | | | | | | |
Consumer and other | | | 15 | | | | — | | | | | | | | | | | | | | | | | |
Total | | $ | 6,536 | | | $ | — | | | | | | | | | | | | | | | | | |
| | 31-Dec-13 | | | | | | | | | | | | | | | | | |
| | | | | Loans Past Due | | | | | | | | | | | | | | | | | |
| | | | | Over 90 Days | | | | | | | | | | | | | | | | | |
| | | | | And Still | | | | | | | | | | | | | | | | | |
| | | | | Accruing | | | | | | | | | | | | | | | | | |
(In thousands) | | Nonaccrual | | | Interest | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | $ | 2,641 | | | $ | — | | | | | | | | | | | | | | | | | |
Home equity lines of credit | | | 111 | | | | — | | | | | | | | | | | | | | | | | |
Junior lien loan on residence | | | 260 | | | | — | | | | | | | | | | | | | | | | | |
Owned-occupied commercial real estate | | | 3,250 | | | | — | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 355 | | | | — | | | | | | | | | | | | | | | | | |
Consumer and other | | | 13 | | | | — | | | | | | | | | | | | | | | | | |
Total | | $ | 6,630 | | | $ | — | | | | | | | | | | | | | | | | | |
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The following tables present the aging of the recorded investment in past due loans as of June 30, 2014 and December 31, 2013 by class of loans, excluding nonaccrual loans: |
| | 30-Jun-14 | | | | | | | | | |
| | 30-59 | | | 60-89 | | | Greater Than | | | | | | | | | | | | |
| | Days | | | Days | | | 90 Days | | | Total | | | | | | | | | |
(In thousands) | | Past Due | | | Past Due | | | Past Due | | | Past Due | | | | | | | | | |
Primary residential mortgage | | $ | 806 | | | $ | 730 | | | $ | — | | | $ | 1,536 | | | | | | | | | |
Total | | $ | 806 | | | $ | 730 | | | $ | — | | | $ | 1,536 | | | | | | | | | |
| | 31-Dec-13 | | | | | | | | | |
| | 30-59 | | | 60-89 | | | Greater Than | | | | | | | | | | | | |
| | Days | | | Days | | | 90 Days | | | Total | | | | | | | | | |
(In thousands) | | Past Due | | | Past Due | | | Past Due | | | Past Due | | | | | | | | | |
Primary residential mortgage | | $ | 1,443 | | | $ | 677 | | | $ | — | | | $ | 2,120 | | | | | | | | | |
Home equity lines of credit | | | 12 | | | | — | | | | — | | | | 12 | | | | | | | | | |
Owned-occupied commercial real estate | | | 703 | | | | — | | | | — | | | | 703 | | | | | | | | | |
Investment commercial real estate | | | 118 | | | | — | | | | — | | | | 118 | | | | | | | | | |
Total | | $ | 2,276 | | | $ | 677 | | | $ | — | | | $ | 2,953 | | | | | | | | | |
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Credit Quality Indicators: |
The Corporation categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually by classifying the loans as to credit risk. The risk rating analysis of loans is performed (i) when the loan is initially underwritten, (ii) annually for loans in excess of $500,000, (iii) on a random quarterly basis from either internal reviews with the Senior Credit Officer or externally through an independent loan review firm, or (iv) whenever Management otherwise identifies a potentially negative trend or issue relating to a borrower. In addition, for all loan types, the Corporation evaluates credit quality based on the aging status of the loan, which was previously presented. |
The Corporation uses the following definitions for risk ratings: |
Special Mention: Loans subject to special mention have a potential weakness that deserves Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date. |
Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. |
Doubtful: Loans classified as doubtful have all the weakness inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. |
Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans. As of June 30, 2014, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: |
| | | | | Special | | | | | | | | | | | | | | | |
(In thousands) | | Pass | | | Mention | | | Substandard | | | Doubtful | | | | | | | | | |
Primary residential mortgage | | $ | 475,381 | | | $ | 1,493 | | | $ | 6,243 | | | $ | — | | | | | | | | | |
Home equity lines of credit | | | 48,556 | | | | — | | | | 110 | | | | — | | | | | | | | | |
Junior lien loan on residence | | | 13,367 | | | | — | | | | 212 | | | | — | | | | | | | | | |
Multifamily property | | | 842,568 | | | | 1,903 | | | | 839 | | | | — | | | | | | | | | |
Owned-occupied commercial real estate | | | 74,745 | | | | 547 | | | | 6,098 | | | | — | | | | | | | | | |
Investment commercial real estate | | | 260,036 | | | | 16,371 | | | | 20,783 | | | | — | | | | | | | | | |
Commercial and industrial | | | 77,050 | | | | 22 | | | | 387 | | | | — | | | | | | | | | |
Farmland | | | 193 | | | | — | | | | — | | | | — | | | | | | | | | |
Agricultural production loans | | | 175 | | | | — | | | | — | | | | — | | | | | | | | | |
Commercial construction | | | 4,584 | | | | 150 | | | | — | | | | — | | | | | | | | | |
Consumer and other loans | | | 19,358 | | | | — | | | | 257 | | | | — | | | | | | | | | |
Total | | $ | 1,816,013 | | | $ | 20,486 | | | $ | 34,929 | | | $ | — | | | | | | | | | |
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As of December 31, 2013, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows: |
| | | | | Special | | | | | | | | | | | | | | | |
(In thousands) | | Pass | | | Mention | | | Substandard | | | Doubtful | | | | | | | | | |
Primary residential mortgage | | $ | 540,609 | | | $ | 1,510 | | | $ | 4,708 | | | $ | — | | | | | | | | | |
Home equity lines of credit | | | 47,794 | | | | — | | | | 111 | | | | — | | | | | | | | | |
Junior lien loan on residence | | | 12,854 | | | | — | | | | 260 | | | | — | | | | | | | | | |
Multifamily property | | | 540,993 | | | | 510 | | | | — | | | | — | | | | | | | | | |
Owned-occupied commercial real estate | | | 70,218 | | | | 619 | | | | 8,898 | | | | — | | | | | | | | | |
Investment commercial real estate | | | 238,722 | | | | 9,573 | | | | 19,111 | | | | — | | | | | | | | | |
Commercial and industrial | | | 51,144 | | | | 23 | | | | 471 | | | | — | | | | | | | | | |
Farmland | | | 197 | | | | — | | | | — | | | | — | | | | | | | | | |
Commercial construction | | | 4,340 | | | | 1,553 | | | | — | | | | — | | | | | | | | | |
Consumer and other loans | | | 15,106 | | | | 837 | | | | 269 | | | | — | | | | | | | | | |
Total | | $ | 1,521,977 | | | $ | 14,625 | | | $ | 33,828 | | | $ | — | | | | | | | | | |
|
At June 30, 2014, $19.8 million of substandard and special mention loans were also considered impaired as compared to December 31, 2013, when $17.7 million were also impaired. |
The activity in the allowance for loan losses for the three months ended June 30, 2014 is summarized below: |
| | April 1, | | | | | | | | | | | | June 30, | | | | | |
| | 2014 | | | | | | | | | Provision | | | 2014 | | | | | |
| | Beginning | | | | | | | | | (Credit) | | | Ending | | | | | |
(In thousands) | | ALLL | | | Charge-offs | | | Recoveries | | | | | | ALLL | | | | | |
Primary residential mortgage | | $ | 2,462 | | | $ | (25 | ) | | $ | — | | | $ | 565 | | | $ | 3,002 | | | | | |
Home equity lines of credit | | | 153 | | | | (24 | ) | | | — | | | | 47 | | | | 176 | | | | | |
Junior lien loan on residence | | | 139 | | | | — | | | | 21 | | | | (12 | ) | | | 148 | | | | | |
Multifamily property | | | 5,630 | | | | — | | | | — | | | | 658 | | | | 6,288 | | | | | |
Owned-occupied commercial real estate | | | 2,468 | | | | (572 | ) | | | 80 | | | | (137 | ) | | | 1,839 | | | | | |
Investment commercial real estate | | | 4,679 | | | | — | | | | 6 | | | | (88 | ) | | | 4,597 | | | | | |
Agricultural production loans | | | 2 | | | | — | | | | — | | | | — | | | | 2 | | | | | |
Commercial and industrial | | | 938 | | | | (38 | ) | | | 18 | | | | 123 | | | | 1,041 | | | | | |
Secured by farmland | | | 3 | | | | — | | | | — | | | | (1 | ) | | | 2 | | | | | |
Commercial construction | | | 44 | | | | — | | | | — | | | | (11 | ) | | | 33 | | | | | |
Consumer and other loans | | | 69 | | | | (1 | ) | | | 2 | | | | 6 | | | | 76 | | | | | |
Total ALLL | | $ | 16,587 | | | $ | (660 | ) | | $ | 127 | | | $ | 1,150 | | | $ | 17,204 | | | | | |
|
The activity in the allowance for loan losses for the six months ended June 30, 2014 is summarized below: |
|
| | January 1, | | | | | | | | | | | | June 30, | | | | | |
| | 2014 | | | | | | | | | Provision | | | 2014 | | | | | |
| | Beginning | | | | | | | | | (Credit) | | | Ending | | | | | |
(In thousands) | | ALLL | | | Charge-offs | | | Recoveries | | | | | | ALLL | | | | | |
Primary residential mortgage | | $ | 2,361 | | | $ | (45 | ) | | $ | — | | | $ | 686 | | | $ | 3,002 | | | | | |
Home equity lines of credit | | | 181 | | | | (24 | ) | | | — | | | | 19 | | | | 176 | | | | | |
Junior lien loan on residence | | | 156 | | | | (1 | ) | | | 44 | | | | (51 | ) | | | 148 | | | | | |
Multifamily property | | | 4,003 | | | | — | | | | — | | | | 2,285 | | | | 6,288 | | | | | |
Owned-occupied commercial real estate | | | 2,563 | | | | (644 | ) | | | 80 | | | | (160 | ) | | | 1,839 | | | | | |
Investment commercial real estate | | | 5,083 | | | | — | | | | 8 | | | | (494 | ) | | | 4,597 | | | | | |
Agricultural production loans | | | — | | | | — | | | | — | | | | 2 | | | | 2 | | | | | |
Commercial and industrial | | | 825 | | | | (96 | ) | | | 32 | | | | 280 | | | | 1,041 | | | | | |
Secured by farmland | | | 3 | | | | — | | | | — | | | | (1 | ) | | | 2 | | | | | |
Commercial construction | | | 120 | | | | — | | | | — | | | | (87 | ) | | | 33 | | | | | |
Consumer and other loans | | | 78 | | | | (3 | ) | | | 5 | | | | (4 | ) | | | 76 | | | | | |
Total ALLL | | $ | 15,373 | | | $ | (813 | ) | | $ | 169 | | | $ | 2,475 | | | $ | 17,204 | | | | | |
The activity in the allowance for loan losses for the three months ended June 30, 2013 is summarized below: |
| | April 1, | | | | | | | | | | | | June 30, | | | | | |
| | 2013 | | | | | | | | | Provision | | | 2013 | | | | | |
| | Beginning | | | | | | | | | (Credit) | | | Ending | | | | | |
(In thousands) | | ALLL | | | Charge-offs | | | Recoveries | | | | | | ALLL | | | | | |
Primary residential mortgage | | $ | 3,340 | | | $ | (393 | ) | | $ | 1 | | | $ | 114 | | | $ | 3,062 | | | | | |
Home equity lines of credit | | | 260 | | | | — | | | | — | | | | (7 | ) | | | 253 | | | | | |
Junior lien loan on residence | | | 63 | | | | — | | | | — | | | | 8 | | | | 71 | | | | | |
Multifamily property | | | 1,562 | | | | — | | | | — | | | | 597 | | | | 2,159 | | | | | |
Owned-occupied commercial real estate | | | 2,428 | | | | — | | | | 19 | | | | (33 | ) | | | 2,414 | | | | | |
Investment commercial real estate | | | 4,272 | | | | — | | | | 6 | | | | (118 | ) | | | 4,160 | | | | | |
Agricultural production loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Commercial and industrial | | | 1,147 | | | | — | | | | 27 | | | | (44 | ) | | | 1,130 | | | | | |
Secured by farmland | | | 3 | | | | — | | | | — | | | | — | | | | 3 | | | | | |
Commercial construction | | | 114 | | | | — | | | | — | | | | (2 | ) | | | 112 | | | | | |
Consumer and other loans | | | 90 | | | | (2 | ) | | | 1 | | | | (15 | ) | | | 74 | | | | | |
Total ALLL | | $ | 13,279 | | | $ | (395 | ) | | $ | 54 | | | $ | 500 | | | $ | 13,438 | | | | | |
The activity in the allowance for loan losses for the six months ended June 30, 2013 is summarized below: |
| | January 1, | | | | | | | | | | | | June 30, | | | | | |
| | 2013 | | | | | | | | | Provision | | | 2013 | | | | | |
| | Beginning | | | | | | | | | (Credit) | | | Ending | | | | | |
(In thousands) | | ALLL | | | Charge-offs | | | Recoveries | | | | | | ALLL | | | | | |
Primary residential mortgage | | $ | 3,047 | | | $ | (456 | ) | | $ | 13 | | | $ | 458 | | | $ | 3,062 | | | | | |
Home equity lines of credit | | | 267 | | | | — | | | | — | | | | (14 | ) | | | 253 | | | | | |
Junior lien loan on residence | | | 314 | | | | (295 | ) | | | 7 | | | | 45 | | | | 71 | | | | | |
Multifamily property | | | 1,305 | | | | — | | | | 11 | | | | 843 | | | | 2,159 | | | | | |
Owned-occupied commercial real estate | | | 2,509 | | | | — | | | | 38 | | | | (133 | ) | | | 2,414 | | | | | |
Investment commercial real estate | | | 4,155 | | | | — | | | | 12 | | | | (7 | ) | | | 4,160 | | | | | |
Agricultural production loans | | | — | | | | — | | | | — | | | | — | | | | — | | | | | |
Commercial and industrial | | | 803 | | | | (15 | ) | | | 37 | | | | 305 | | | | 1,130 | | | | | |
Secured by farmland | | | 3 | | | | — | | | | — | | | | — | | | | 3 | | | | | |
Commercial construction | | | 240 | | | | — | | | | 1 | | | | (129 | ) | | | 112 | | | | | |
Consumer and other loans | | | 92 | | | | (4 | ) | | | 4 | | | | (18 | ) | | | 74 | | | | | |
Total ALLL | | $ | 12,735 | | | $ | (770 | ) | | $ | 123 | | | $ | 1,350 | | | $ | 13,438 | | | | | |
Troubled Debt Restructurings: |
The Corporation has allocated $631 thousand and $913 thousand of specific reserves, on accruing TDRs, to customers whose loan terms have been modified in troubled debt restructurings as of June 30, 2014 and December 31, 2013, respectively. There were no unfunded commitments to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings. |
During the six month period ending June 30, 2014 and 2013, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included one or a combination of the following: a reduction of the stated interest rate of the loan; a deferral of scheduled payments with an extension of the maturity date; a permanent reduction of the recorded investment in the loan; or some other modification or extension which would not be readily available in the market. |
The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending June 30, 2014: |
|
| | | | Pre- | | | Post- | | | | | | | | | | | | | | | |
| | | | Modification | | | Modification | | | | | | | | | | | | | | | |
| | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | |
| | Number of | | Recorded | | | Recorded | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | Investment | | | Investment | | | | | | | | | | | | | | | |
Primary residential mortgage | | 1 | | $ | 414 | | | $ | 414 | | | | | | | | | | | | | | | |
Investment commercial real estate | | 1 | | | 1,580 | | | | 1,580 | | | | | | | | | | | | | | | |
Total | | 2 | | $ | 1,994 | | | $ | 1,994 | | | | | | | | | | | | | | | |
|
The following table presents loans by class modified as troubled debt restructurings that occurred during the six month period ending June 30, 2014: |
| | | | Pre- | | | Post- | | | | | | | | | | | | | | | |
| | | | Modification | | | Modification | | | | | | | | | | | | | | | |
| | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | |
| | Number of | | Recorded | | | Recorded | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | Investment | | | Investment | | | | | | | | | | | | | | | |
Primary residential mortgage | | 2 | | $ | 607 | | | $ | 607 | | | | | | | | | | | | | | | |
Investment commercial real estate | | 2 | | | 2,884 | | | | 2,884 | | | | | | | | | | | | | | | |
Total | | 4 | | $ | 3,491 | | | $ | 3,491 | | | | | | | | | | | | | | | |
The identification of the troubled debt restructured loans did not have a significant impact on the allowance for loan losses. The following table presents loans by class modified as troubled debt restructurings that occurred during the three month period ending June 30, 2013: |
| | | | Pre-Modification | | | Post-Modification | | | | | | | | | | | | | | | |
| | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | |
| | Number of | | Recorded | | | Recorded | | | | | | | | | | | | | | | |
| | Contracts | | Investment | | | Investment | | | | | | | | | | | | | | | |
Primary residential mortgage | | 1 | | $ | 160 | | | $ | 160 | | | | | | | | | | | | | | | |
Total | | 1 | | $ | 160 | | | $ | 160 | | | | | | | | | | | | | | | |
|
The following table presents loans by class modified as troubled debt restructurings that occurred during the six month period ending June 30, 2013: |
| | | | Pre-Modification | | | Post-Modification | | | | | | | | | | | | | | | |
| | | | Outstanding | | | Outstanding | | | | | | | | | | | | | | | |
| | Number of | | Recorded | | | Recorded | | | | | | | | | | | | | | | |
| | Contracts | | Investment | | | Investment | | | | | | | | | | | | | | | |
Primary residential mortgage | | 3 | | $ | 482 | | | $ | 482 | | | | | | | | | | | | | | | |
Total | | 3 | | $ | 482 | | | $ | 482 | | | | | | | | | | | | | | | |
There were no loans that were modified as troubled debt restructurings for which there was a payment default, within twelve months of modification, during the three months ended June 30, 2014 and 2013. |
The following table presents loans by class modified as troubled debt restructurings for which there was a payment default, within twelve months of modification, during the six month period ended June 30, 2014: |
| | Number of | | | Recorded | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | | Investment | | | | | | | | | | | | | | | | | |
Primary residential mortgage | | | 1 | | | $ | 55 | | | | | | | | | | | | | | | | | |
Total | | | 1 | | | $ | 55 | | | | | | | | | | | | | | | | | |
The following table presents loans by class modified as troubled debt restructurings for which there was a payment default, within twelve months of modification, during the six month period ended June 30, 2013: |
|
| | Number of | | | Recorded | | | | | | | | | | | | | | | | | |
(Dollars in thousands) | | Contracts | | | Investment | | | | | | | | | | | | | | | | | |
Owner occupied commercial real estate | | | 1 | | | $ | 406 | | | | | | | | | | | | | | | | | |
Commercial and industrial | | | 1 | | | | 270 | | | | | | | | | | | | | | | | | |
Total | | | 2 | | | $ | 676 | | | | | | | | | | | | | | | | | |
The defaults that occurred during the periods presented did not have a significant impact on the allowance for loan losses. |
In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Corporation’s internal underwriting policy. At the time a loan is restructured, the Bank performs a full re-underwriting analysis, which includes, at a minimum, obtaining current financial statements and tax returns, copies of all leases, if applicable, and an updated independent appraisal of any property. A loan will continue to accrue interest if it can be reasonably determined that the borrower should be able to perform under the modified terms, that the loan has not been chronically delinquent (both to debt service and real estate taxes) or in nonaccrual status since its inception, and that there have been no charge-offs on the loan. Restructured loans with previous charge-offs would not accrue interest at the time of the troubled debt restructuring. At a minimum, six months of contractual payments would need to be made on a restructured loan before returning a loan to accrual status. Once a loan is classified as a TDR, the loan is reported as a TDR until the loan is paid in full, sold or charged-off. In rare circumstances, a loan may be removed from TDR status, if it meets the requirements of ASC 310-40-50-2. |